It has been a while since I have updated this and I wanted to share with you how the number of foreclosures is affecting the NoVa real estate market. As many of you know a foreclosure happens when a bank repossesses a home because the borrow is delinquent on mortgage payments. While there are many reasons a borrower can become delinquent on their mortgage the most common reason in this market is due to borrowers obtaining a ‘teaser loan’ that starts adjusting upward after a certain period and the borrower is unable to keep up with the higher mortgage payments.
The increased rate of foreclosures in the market is leading to a higher supply of homes on the market and putting downward pressure on prices. When the supply of homes for sale in a particular neighborhood or area is high then buyers have many homes to choose from and sellers have to make sure their house stands out as the ‘best value’ for that area based on price and condition. When you add foreclosures, or bank-owned properties, into the mix you have even more supply for for buyers to choose from and often the prices on bank-owned properties are lower than traditional resales. There are two reasons for this: 1) bank-owned properties are usually in bad condition, need work, and are being sold ‘as is’ and 2) the bank has held the property longer than they wanted and they slash the price to get it off of their books. This increase in the number of homes for sellers to compete with, and the lower prices attached to bank owned properties, forces prices down.
If you are a seller trying to sell in a market where you are competing with bank owned properties you need to make sure your house shows better than the bank-owned properties and is priced competitively compared to all of the competition.
If you are a current home owner facing foreclosure contact your lender immediately and try to renegotiate your loan terms. This is becoming more common as the rate of foreclosures increase. Remember that banks don’t want to foreclose on your house because it costs them a lot of time and money to do so.
Read the Washington Post article about suburbs seeing a rise in foreclosures here.
If you would like to discuss this topic further please contact me via email or phone.